tv Fast Money Halftime Report CNBC June 20, 2012 12:00pm-1:00pm EDT
also, a true alternative investment. have you thought about investing in diamonds? we have the chairman on diamond investment managers. a lot. >> that's it for "squawk on the street." thank you for watching as we hit noontime on the east coast. here it is, the halftime report. simon, thanks very much. four hours to go until the close. here is where we stand on the street. the market is waiting on the fed and very much on hold before mr. bernanke & company make news today, the dow, s&p and nasdaq are as follows, a fifth of a percent decline. oil and gold down as we keep our eye on the commodities phase. let's get to stories we're following on the special edition of the halftime show. the man of the hour, there he is, fed watch, twister qe 3. will they or won't they. take positions as soon as it comes out. facebook finding a bottom. the company getting advertising
love from coca-cola and ford. the stock has found some support. ken joins us with the first call on facebook. calling microsoft, software giant expected to unveil details on its highly anticipated windows phone. we're monitoring the latest there. welcome to the "halftime report." there's lots to trade today. let's get to it. someone taking it off the table, head of risk management going all in cash. he joins us now on the fast line with the reasons why. keith, thanks for joining us. >> hey, scott, thanks for having me. >> taking your chips and going home. why? >> i think into bernanke here heads you lose, tails you lose. qe 3, a continuation of what's happening since really the middle part of february and march. you might get a pop in commodities but fyi not seeing that in gold and oil right now. secondly if he doesn't go to qe
3, which is the bigger concern that i have, the correlation risk comes on. in other words, the u.s. dollar goes right back up and everything else goes straight back down. doing more has not worked and will not work is my base premise from a growth perspective and that's what takes down the market's multiple, a precarious position. >> i know traders want to get involved. let's get to it. dr. have j. >> i think he will do anything with qe. he'll leave the door open. a lot of jawboning, no action at all as far as twist, mortgages, anything else. i think he'll leave that out there as one of the things they will continue to make necessary but i think it will be all talk. >> what you're seeing is keith mccullough made the right move then. if that's what happens, the market is likely to be disappointed. >> no, not at all. i think if the market did what
keith is anticipating, keith would be right. i don't think the market will do what keith is anticipating. he'll talk, won't do a continuation of qe 3, then the market will cover and go higher, scott. >> keith. >> like i said, heads you lose, tails you lose. he doesn't have a choice. no matter what he does he's in a box. if he doesn't give drugs, commodities trade, goes down, if he does give you the drugs you're going to have the extent of viagra in terms to how long you can hold onto trades. basically what happened here, everybody in the room knows it, every executive qe reaction in the commodity market shorter and shorter lived. that's the biggest problem here. qe does not deliver the elixir any of these other central planners want you to believe, which is gross. if it doesn't give you gross, market put a lower and lower multiple, intermediate term, that's the bigger concern. >> in other words, though, keith, if he doesn't do that,
which is exactly what you said, he should realize that it hasn't worked, won't work, that's why i believe we will rebound if he doesn't give that elixir. >> unfortunately you're going to be doing that from lower prices. the entire market going straight up for the last two and a half weeks with u.s. dollar going straight down. >> dollar hasn't been going down. >> correlation between the u.s. dollar and everything else between .91 and .96. yer yes, i'm in 100% cash. >> simon. >> great call. i like make the call as opposed to buy and hold like the rest of the world is doing. it's a tough decision getting back out of the market. what's the catalyst to get back in. may have good reasons to get out, 100 cash, no one making money. what's the catalyst to get back in on the other side? >> my catalyst has always been the same. if you let the dollar strengthen and let oil prices fall, food
and emergency prices fall, you will let the one thing an economy and stock market multiple needs which is growth, recover. ben bernanke stood in the face, decided to move to 2014. arbitrary an unelected official, decided to do that on his own. he did not have to do it. the growth trajectory was fine then. that slowed growth. i would as soon get him out of the way, let the market takist penalty shot, see recovery on a free market basis. >> keith, let me tell you how i'm seeing it. i'm not that different in how you're looking at global economy. it has weakened p. i've been in cash a good part of the rally. with the exception of jcpenney, plays out the market will knee jerk done when the fed does nothing. i don't think expect them to do nothing. hope in terms of hu bulls look at a massive coordinated
stimulus package. china could care less, i don't care about anything they say. that lifts the market. time for all cash when you're left with the economy eroding completely. >> i think, steve, if you go back. i think it's a lesson nobody wants to believe there's any similarity between qe 3 of 2008 and now. but i guess the expediency and political pressures associated with expediency come up with the next big stimulus is equally as high, maybe higher. what you came to realize throughout qe 3 of 2008, at that point went to 90% cash, relatively more bullish then. at that point you come to realize more of what has not worked is signaling things could get worse. people freak out, outflows into equity in particular. that's when the market completely loses hope of a bid. as i said multiple times hope is not a process. >> ensanaa?
>> i disagree. we don't have time to debate that. they are doing their job. fiscal policy, europe a mess, china going down, china goes lower for other reasons than fed policy. let me ask you a question, if you're looking for a headline grabbing trade, a john paulson moment, 200% short betting on correlation trade where everything goes down and make paulson-type money instead of 100% cash safely sitting on the sidelines. >> i'm not safely sitting on anything. what's safer you wouldn't tell me particularly why you wouldn't disagree with me. >> if we have time i'd be happy to. >> you can call that as net short, but i think it's aggressive. the point is the point. you step up and make the call when you see signals to perpetuate the call. i see the signal. i've been making it multiple times. you can disagree fwu want.
ben bernanke disagrees, too. if you get policy right, you'll get the dollar right. if you get the dollar right, you'll get everything else right. >> thanks so much. see how it pans out. have you back when you change your position if and when. >> jpmorgan sold off between 65, 70. shares popping 2.5 on the news, down more than 10% since the company announced the multi-billion trading loss. this brings back dividend, buyback, two key words people are focusing on. >> the best idea was do what they did, get rid of the overhead, trade, there was $8 billion in realized gains on the other side. we haven't seen the end of this. at some point they will buy back stock and increase the dividend. not in terms of the way the market is looking with the risk in europe. >> do you think the worst is behind jpmorgan from a stock
standpoint? is it safe to own them right now? >> i would own them. $2 million, just headline news. i'll be owning the stock. >> ken who made the call joins us now. welcome to the program. >> thank you very much. >> why do you make this call essentially tell people do nothing with the stock. >> i think we've been fairly positive on the stock longer term for some time leading into the ipo. i think that given how events have turned out, given concerns around lockups post the next quarter, we think there's a better entry point six to nine months, a lot of catalyst that underlie our sort of positive long-term thesis are likely to be at least nine months out. we feel like there's a better entry ahead. >> facebook seems to have gotten traction, a four-day winning streak, positive news from advertisers standpoint, coca-cola and ford. you think the lockout is going
to lead to a further slide in shares you would rather have people wait to take advantage of. by the way the lockup august 15th, the first one, correct? >> the first one. you'll go from 15% of the shares outstanding to about 25 but then over three months we see that going up to 60% of total shares. >> what's important you believe in the long-term story of facebook while others are questioning the business model. >> i do. in some respects it was a hard note to write. i think we very much believe in facebook's underlying advantage in terms of driving higher yelds for advertisers ultimately monday advertising mobile. still it's going to be somewhat of a show me story over the next few months. when you look at the lockups coming a bill shares or show versus 400 currently in the flow. i think that is a concern for us. so we just felt that, look, it's important for investors to see the overall long-term opportunity but i think they should also show some patience right now they will get a better entry ahead. >> ken waiting on the feds so we've got to run.
talk to you soon. >> thank you. coming up our special coverage of the fed's rate decision kicks off with all-star lineup. ken cress, charles ryan hard, ken vol peter. market analysis and more up next. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.
here because it's fed day. special days call for special shows. breaking into the halftime report with the half hour fed extravaganza. i'm brian sullivan, welcome, everybody. that call should be out in about 15 minutes time. this is not some by the book meeting. there's a lot of talk ben bernanke may take more action to stimulate the economy. what action that may or may not be has been the subject of speculation. with that in mind, let us set the stage for you. cue the music. since some cynical ones think the fed is trying to rig the game, our take on the fed's options in a way only we dare you to bring. behind fed door number one, option one would be the big bang. that would be an announcement of quantitative easing part three. not the consensus view. some do believe if it happens. behind door number two, more twisting, extend operation twist, right? sell bonds, buy longer dated
ones. all part of the continued push to drive down rate and keep that cheap money coming, america. a third option, direct the time line, fed could push out late 2014 time line into 2015 or even beyond. and finally behind fed door number four, the fed could do nothing, which if the market is pricing in some action, as many suggest it is, this could really be the booby prize in the fed special. you can see the fed has a lot of options. which door will it choose. let us look for answers. senior economics reporter steve liesman contestant number one on the roof of the federal reserve. steve, we try to have fun, serious, talking about the fed, but the options are real, contestant number one, mr. liesman, do you pick any doors on what the fed will or won't do today. >> my mom told me never to play the game unless you know what
the prize is. what are you offering? that's an important part of it. >> continued cheap monetary policy, flooding the global system with liquidity. >> right, right. there are pluses and minuses to every single option you put up there. more qe would probably be the most effective thing out there. research shows operation twist the least effective programs the fed has run. twist would be the easiest for the federal reserve to get consensus fomc consensus around it would buy time although fed chairman bernanke is not one to show easy options or mediocre options. the question around awful it is what would be the end of fed policy here and the cost and benefit analysis here, brian, in the sense if they were to do something right here, what kind of effect would it have on already low interest rates and what would be the effect on the fed's credibility if nothing happens here. the market geared toward some
fed action here. if you look at inflation spreads out there, they seem to be signaling the markets want something. the fed chairman would be cautious about disappointing market expectations. i will tell you everything you put up there is speculation. it's good speculation but no explicit guidance from the federal reserve. >> those are all options we've heard from at least one reputable firm, one reputable voice out there as being possible, things the fed could or could do number four and do nothing. steve, stick around. as we head to the fed, a quick look at how stocks and bonds are trading. update on equity mark, dow jones industrial, nasdaq and s&p 500. all in the red not by much. nasdaq down .2, everyone on hold waiting for the fed. what about bond market. u.s. treasuries. what we're talking about, folks, fed, twist and everything really is going to impact that if they do something. right? go shorter, buy longer, try to push the long end down.
ten-year yield 1.66%. bring in special gegs bill gross, founder of pimco, founder, chief investment officer still with us. mr. gross, bill i'm not going to call you contestant two. i will ask you this, ahead if the fed has to take some action today what will it do. >> well, monty, i mean brian -- steve, you're not a good contestant, you need a costume and something more lightening to bring you into the panel. you need to make a choice. i'll make a choice. door number twois t is the choi. kick the can for a month or two in terms of additional qe. wait to see what the eu will do in terms of fiscal policy to buy spanish and italians bonds and make a decision in august. so door number two. >> very good. made a selection.
charles reinhard, do you think a, they will take action, and b, what? we think that lines up with our views. acknowledge growth has slowed a bit, inflationary pressures are more subdued than the last time. later today when we see their forecast we'll take on their forecast and that will justify the federal thanks tas place today. >> charles, what will it do anyway. they extend twist, they do it, try to keep -- 1.666%. it's almost free money. negative real rates in some cases. that's not stimulating the economy. why would another 10 or 20 basis points down on the long end do anything? >> it probably won't do much. we do think the effect of twist 2 would have a big impact on the economy. however, once growth completes decelerating, which it's been doing the hass several months and probably helpful on the other side to the degree it
helps make those things financed more affordable. >> guys, we're going to take a quick break because we want to be fully ensconced when it comes out, charles, bill, steve, a short break. we're minutes away of finding out what, if anything, the fed will do. trying to have a little fun with it. also the politicization of the fed. are they immune to politics in this huge election year? i'm going to put it to our panel, our guests, our contestants when this federal special returns. stick around. the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.
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welcome back to our fed special. we have our guest, bill gross, steve liesman. i want to follow up with the question i posed before the break. at some point fed action, whatever they do is becoming less and less impactful on the market. at a point reaching if we get to a point where they keep doing things it's going to hurt, not just not help. >> i think that's the case. i think chairman bernanke recognizes that he recognizes negative consequences of these policies. not only is the fed conflicted
between hawks and doves but even the doves chairman bernanke and others recognize qes and twists can do little from this point forward to improve the economy, create significant damage. let's look at some of the financial business models ranging from money market funds to banks to insurance companies and pension funds are collapsing based on their inability to bring historical returns and yields to the bottom line. so fiscal policy, as chairman bernanke pleads, must step up to the growth plate. same thing in euro land. >> ken copeland of vanguard. every time we go to break we're going to multiply. we'll be like the brady bunch at the end of the show. ken, i want to bring up something to you. someone with morgan stanley wrote about a week ago, said the fed is at a point where it's under uncomfortable public skrat any now. he feels like any action if it
takes it would be viewed as a political one or could be thrust in a political light. is the fed, i know it's supposed to, is the fed apolitical in this election season? >> i would hope so. i hope the fed would be focusing on the real economy and what actions it should be taking. i think an extension of the twist, which is probably likely to happen today would not be viewed particularly political. a qe 3 would be viewed as more political. the closer to the election the greater the risk is that it could be viewed as lit cal. today is a safe time period. >> steve, have you got something to say to that? >> yeah, i think that's right. what's interesting it's already political. i think what the fed will say, they are going to take what action the economy needs regardless of politics. i think the bar becomes higher. it has to be more obvious it's
needed. the reason why i've been skeptical about qe 3 today. i don't think the bar is crossed or reached that limit for qe 2, a 2% economy, a tick up in unemployment. to come forward and say $600 billion of qe 3 which seemed to be the case, the political environment now, maybe it's going to get worse, certainly right now it's already -- >> steve, i've got to disagree a little bit, we'll have the panel. fed announce a qe 3 program, you know people are going to kill them for trying to help the president win re-election by stimulating the job market. don't you think if they wanted to they would be a bit afraid or think twice before making a big move? >> i think they would think twice. i think what would happen, brian, the economic case would be obvious to everybody. you would have rising unemployment, gdp in the zero, 0.5% gdp or negative. you would have a deflationary
case. any one or combination of those three things would be the obvious case for the fed to act and i think that's where it will be. >> bill gross, chime in if you could, politicization of the fed. some people think apolitical, some people think political, where do you stand on this? generator-of- generate debate. >> i think the fed must remain apolitical but cognizant of the threat to their independence over time. that's been the case for every since i suppose it was created. what i'd like to comment on, whatceive brought up an hour, two hours ago, i would like to see if the fed stops doing qe, their stock, treasury absorbed or fed observes enough treasuries to keep interest rates level 165 ten-year. we're more or less persuaded at
pimco, the flow, doesn't buy treasuries, veelds will move higher by 5 or 10 basis points. an interesting experiment today. >> bill, that was the wrong call last time. when qe 2 ended rates state relatively low after the feds stopped buying them, if i'm not mistaken. >> real rates went up. that's what we need to focus on. threat to inflation, additional purchases would not stimulate economy. watch real rates. that's the real thrust, real focal point for fed policy although it's not well discussed. >> charles, a lot of our viewers, probably more viewers out there buying stocks than they are buying individual treasuries, not a lot of retail investors buy directly. do you think fed can stop until it can move asset prices like stock more than it has. >> i think if you think about the way the fed can be affected in transmitting its policy to the economy, has to create some
spirit, confidence, make people feel better, employers and kurls. a couple ways to do that, keep rates lo, stabilize housing market. for many the biggest asset they have. then also to the degree share prices stabilize and do better, that's important, makes ceos and cfos on the hiring front. >> any reason to own u.s. treasuries now, charles? >> we are underweight u.s. treasuries. part of a developed country sovereign debt has a weight position. underweight -- >> are you actively pursuing treasuries? >> no, we haven't changed our stand for quite sometime. we have a very small position for sometimes, we find it in invest men bonds and municipal securities. >> i want to add for the panel the idea if the fed does do qe, i would not be surprised to see a piece of that mortgage backed securities, any piece out there worthwhile for the fed to affect
mortgage backed securities. >> i know we've talked about that before, steve. we could get the call any time. ken volpert, if you had to buy anything fixed income, do corporate look attractive. >> corporate attractive, commercial backed, munis look attractive now. >> that's a big spectrum. can you narrow it down a little more where the credit spectrum are you buying junk? >> not junk. investment grade credit, single-a, bbb, corporate bonds. cmbs high quality aaa sector and munis. munis in ten years 115% of the yield of treasury securities in ten years. >> what are you going to get from high quality bond why not at&t equity and take the 6% dividend. >> corporate are 2% yield over
treasuries in the 10-year part of the curve, five and ten-year part of the curve, for corp. bonds relative to treasury securities. >> bill gross, what do you think the market will be disappointed by if it doesn't get today -- insert answer here, right? what do they want? >> they want something. they want door number two, not door number four, in terms of your metaphor, to the extent they get something over a period of time, language, additional purchases, maybe throw in mortgage as steve mentioned, then i think they will be placated for the moment. as well as i've spoken to the negative consequences of all of this going forth will impact growth to the downside ultimately. >> when does it impact growth to the upside. isn't that what we're waiting for, one of the two, maximize employment. 8.2% unemployment. >> that's factual. we can argue about that for
hours. to the extent we have 2% growth, perhaps that's better than the zero percent that would have resulted. to the extent we have 8% unemployment, perhaps we'll have 9 or 10. we'll never know. i think buying securities to a certain point promotes animal spirits and trickle down in terms. >> fed fund rate is unchanged in terms of operation twist the committee is saying it decided to continue through the end of the year its program to extend the average maturity of its holding of securities specifically the committee says it intends to purchase treasury securities with remaining securities of six years to 30 years at the current pace or sell or redeem equal amount of treasury securities with remaining maturity of three years or less. discontinuation of security extension program should put downward pressure on interest rates and make broader financial conditions more accommodating. the committee is maintaining its existing policy of reinvesting
existing payments of holdings agency debt and morocco backed securities and agency mortgage backed securities. the committee is prepared to take further action as appropriate to promote stronger economic recovery and sustained improving labor market conditions in a context of price stability the fed says. in addition we got a supplemental statement from the new york fed in the statement from the new york fed, fed saying federal open market committee affected open market trading desk federal reserve bank of new york to continue through the end of the year its program to extend average maturity of feds holdings and treasury securities, specifically, purchase treasury skerts, six to 30 years, sell or redeem equal par value of maturities with remaining maturities of approximately three years or less. the continuation of the maturity extension program will succeed at the current pace and sale and
redemption of 267 billion in treasury securities by the end of 2012. in terms of the rest of the statement, the fed says growth in employment has slowed in recent months and unemployment rate remains elevated. household spending appears to be rising at a somewhat slower pace than earlier in the year. inflation, the fed says, has declined, mainly reflecting lower prices of crude oil and gasoline and longer term inflation expectations have remained stable. finally this vote was not unanimous. one vote against. voting against the action was jeffrey lackert opposed extension program. reporting live, cnbc. >> not a big change, market seems disappointed. look at the drop in the dow. let's go to bob pisani. we're showing viewers we lost about 50 points in 10 seconds. market looking for some of that
fed special sauce they did not get. >> well, the important is the one thing they wanted most qe 3 that would have extended the gains they did not get. got the selloff. that's the immediate knee-jerk reaction. this is the kind of gain you get people who sell right on the news. then you get other people who move a little bit after. watching these fed announcements is very interesting. two different kinds of players who will come in. guys play on the headline and guys who will argue that the numbers aren't that bad or the comment is not that bad. notice here-of- how we're coming off. bank stops immediately dropped when we got this. bkx, then rallied back. the important thing here, we've had a huge rally in the last four or five days, 4%, 5% move in materials. in apartments patience of this a downdraft what they didn't get on the perfect scenario is fine. a pretty good market reaction. now turn on what's going on on
28th and 29th. some movement toward common fiscal policy, banking policy, go a longways to sustaining the market. >> chicago, rick santelli, how is this fed action impacting rates. >> let's go through every market intraday charts. twos, forego that, threes. two-year yield popped up towards 40 basis points. makes sense, sale side. not a lot of change, 72 before, hit 73, no big deal. here is where the action shows the buy side of the twist. around 167 on the tep, dropped four basis points. close to 280 on 30 year, dropped 7 basis points. dollar index doubled from 10 to 20 an euro went from a nick under 127 to 126. to summarize equities were disappointed, treasuries pretty much had it right and all buying seems to be current. the same spot on the yield curve
the federal is buying. back to you. >> the bond guys trump it again, they were right and other people wrong. a short break. come back and more reaction from esteemed panel. my guess another box, too. why not? box inflation when we return on the fed special. dow off its lows but fell on fed news. back after this. s. from around the world...ries ...with the best math scores. ...the united states would be on that list. in 25th place. let's raise academic standards across the nation. let's get back to the head of the class.
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all right. welcome back here. we see stocks came off their lows still fell, gold doesn't like it, down 20 bucks an ounce. rates move a little bit. buying in six to eight maturity range, a little time degree through the full statement steve liesman. the read initially -- my read it appears to be a little more negative than it was earlier in the year, household spending comment, rate of growth is slowing down. how much longer, how many more meetings can we have with a more negative sounding statement before we get greater action than we saw today? >> i think it's one or two, brian. i think jackson hole meeting in august setting up to be consequential. before that if you get confirmation in the employment report, the next one coming up
in early july that we've had a serious downshift in job growth, i don't think the fed thinks right now that the 60 or 70,000 we're getting is the right level. it's more north of 100,000. if we get a confirmation on 60 to 70 range, unemployment rate start shifting up again. i would say about this statement, it is a little more than the consensus expected. i heard the consensus talking about extending twist through september. now they have extended it through the end of the year. what's really interesting, there's only so much the fed owns in short-term securities. what i don't know and need to check, i'm trying to check right now, whether or not the actual amount of monthly twist will change here as they try to extend out the short-term securities they own. what, bill gross, if you're there. 260, do that over six months now, that's 40 billion a month. is that about what they have been doing or less. >> steve, i was going to ask you
the same quechlt i think it's a little bit less. this is a six-month program at 250. i think they have been doing 50 billion a month. so it's a little bit of a stepdown wait and see type of effect, kick the can for more months than door number two was anticipating. >> i think the key here, brian, they have not ruled out qe, a possibility, interim step or last step. >> you're right. that's what i was going to go to with charles. this has taken a negative tone. for example, thanks to the team that compared this to last one and thanks to our great cnbc staff. charles, in a previous statement they wrote labor market conditions improved. now they wrote growth in employment slowed, similar around household spending. this is a negative statement for the fed. >> they are acknowledging growth
decelerated since the last meeting and they are watching it. i think that's a good thing. they have their eye on the ball. they are acknowledging some of the recent incoming data and interpreting it. they stand ready to act further if they feel it's justified. you talked earlier, you know, about the political season. unfortunately the fed has a mandate based upon employment and inflation. a lot of this comes down to how it is communicated. with that i applaud the fact for enhancing communication strategy. >> steve, got to leave there, into fast meantime already. >> very important people tune into the 2:00 forecast from the federal reserve because that's going to tell us just how down beat they are, tell us a lot about the future of policy. >> he's on our show, i'll stick around for that. ben, ken, charles, steve, bob, rick, thank you. the fast money team coming up right after this. it's very important to understand
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the the fed's comments here and take a look at what the market is doing as well. there's reaction across the spectrum. there's a look at ten-year yields following 162 as the yield on the ten-year stock took a hit. most materials and gold extending their declines as well. it is important to note stocks off the worst levels after the
initial drop following the fed decision. they are coming back. there's a look at commodities, crude oil down 3%, brent, gold is down $25 an ounce. we continue to keep our eye on that as well today. david kelly, chief global strategist at jpmorgan funds joins traders to break down market moves post fed. welcome to the show. great to have you. were you surprised? it certainly seems as though the market was a bit disappointed. >> i wasn't surprised. i didn't think the federal reserve would extend their guidance. that could be contradicted by what the individual members of the committee are going to say in the release at 2:00. i wasn't expecting qe 3 because i think the federal reserve wants to hold the big gun in reserve in case we do have a deterioration in europe. i didn't expect any more than this. perhaps the market were expecting more than this. the bigger picture is, you know, ththe federal reserve is at the limit of what it can do to help the economy.
it's not like lowering interest rates anymore will do the slightes to help the economy. they are headed more to help monetary ease to help the economy in the first place. >> david. >> don't you think the fed if they do something, i understand about the deterioration in europe, don't you think there's a chance they go when they come out and announce their massive program? to me this was no surprise at all to anybody sitting here, simon or scott, what we all said during the break and expect the market to move up. now it's in a holding pattern. what's your thoughts on that? >> i don't think the federal reserve will make any moves because of policy maker's moves in europe. if we had another problem in europe, some big crisis by which greece did get kicked out of the euro, federal reserve would have to come up with something big to respond to that to calm financial markets. if europe does something to help grow european economy, that's not a reason for the federal to act any further. i think a lot of people in the fed feel like they have gone to
the limit of what they should do. they have been cautious taking further steps. >> making any trades off this fed statement that came off today? >> scott, i was short gold, i'm still short gold, looking for it to trade down gld to 150, 149 area, scott. that's one of the things i'm looking for short-term. if i was trading crude i'd loo look for 80 there. as far as this being exactly what i thought, i thought they would jawbone and thus leave the door open in case something happens overseas. >> of course they were going to leave the door open, doc. >> that's what i said, leave the door open, not going to do qe, a new version of twist and, thus, we are positioned then for other factors to play out in the market, scott, like a recovery in europe if we get that, then watch for these big international exporters to do exceedingly well. >> simon baker looking at the markets here coming all the way off their lows here.
s&p 500 down 4.5 points. >> i think that's encouraging. looks the market has been up 4 out of the last 11 days. it's in the market in cash like keith you have to consider buying on the dips. as you said, it a es not triple digits and not down. you have to go in and own equities in here at this stage. >> don't tough do that, ron, given the fact of europe coming up with something deems to be substantial and credible enough, risk is going to be on right away regardless of what the fed did or did not do today. or tomorrow or the next day. >> yeah. >> scott, i wouldn't change anything said about the stock market. you have to be long here. we had a 10% correction. that's plenty. the one thing that no one mentioned is in the fed's announcement inflation is declining. not only is the door open to qe3, i believe the fed will talk through it. if deflation declines inconsistent with the other mandate an worry about the
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coming up today, breaking down the fed. economist vince reinhart and ceoo caterpillar weighs in. new details on the rogue jpmorgan trade and a live update of facebook where the ipo is under the microscope. now back to scott. >> all right, sue. thanks so much. let's take a look at euro-dollar here. a sharp move and the reversal. you did see the dollar move up pretty strongly on the fed statement. proctor and gamble lowering guidance. citing a negative impact of foreign exchange rates and changes in softness in developed markets. simon baker, you have been short this name you said for a week. you've been in good position to see this. i'm just wondering if all of the talk of the currency fluctuation is somewhat overrated, if it's no different than a retailer
trying to blame the weather. those look at proctor and gamble saying this is as much a management issue as a currency issue. >> i've visited proctor and gamble in gengeneva. they brought us pringles and pampers and innovators for 100 years or so and bob anderson sent a note to the employees they're not doing enough innovations. you're there for 20, 30 years. they just announced to save $10 billion over the next 5 years. 6,000 people lose their jobs. it's tough to be an innovator looking behoond your back to lose your job and they have a big problem. >> one problem -- there are also those who say that the culture was the strong point and turned out so many successful senior executives, it's amazing. so it's quite a change that's taking place and lost market
share and key market share to their competitors. >> yeah. true. and keep in mind it's like a drug company. when you have that many products you need the next blockbuster to move the needle on the revenue side and they haven't. to me, currency is the big story. pepsi said 3% hit to earnings. that's bigger. coke 3% to 5%. look at the multi nationals, not as cheap as you would think. >> to the point of currency's a risk and to simon's point the other part is they're not innovating and bringing out the big, new products and take a look at intuitions today, mainly selling the 57.50 calls and people willing to stick with the stock and get cheap protection by selling that in the money call. >> all right. final trades when we come back. to put your cash? here's one you may not have thought of -- fidelity. now you don't have to go to a bank to get the things you want from a bank, like no-fee atms, all over the world.
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